Buyers gave shadows when they wore their bags along the waterfront in Portland, Maine, USA on December 26, 2024.
Kevin Lamarque | Reuters
It's not just Walmart.
The managers of companies that serve all from Penny-Pinching-Gruerbreiser to first-class travelers see what has been imposed on the US economy for years, despite longer inflation. In addition to high interest rates and persistent inflation, the CEO now deals with how to deal with new hurdles such as on-and-and-off-and-off tariffs, the government's layoffs and the deterioration in consumer mood.
In the past few weeks, in the past few weeks, retailers and other consumer businesses have been warned in the past few weeks that sales in the first quarter could be softer than expected and the rest of the year could be more difficult than Wall Street. Many of the managers were responsible for unusually cool weather and a “dynamic” macroeconomic environment, but the early days of President Donald Trump's second term brought new challenges.
Economists mainly expect that Trump's new tariffs for goods from China, Canada and Mexico will increase the prices for consumers and dampen expenses at a time when inflation remains higher than the target of the Federal Reserve. In February, the confidence of the consumer – which can help to signal how many buyers are willing to exclude – the greatest decline since 2021. A separate measure for consumer mood for March was also worse than expected.
Stock Diagram -iconstock -Igram -Symbol
Nyse Arca Airline Index compared to the S&P 500.
Another sign of the weakness was in the flight. The sector, especially large international airlines, had been a ray of hope after the pandemic, with consumers repeatedly demonstrating that they would not give up any trips in view of the greatest jump inflation for more than four decades. This week, however, the CEOs of the four largest US airlines – UnitedPresent AmericanPresent delta And southwest – said that you see a slowdown in demand this quarter. Americans, Delta and southwest reduced their forecasts in the first quarter.
In addition, the labor market, the strength of which has been the country's economic glue in recent years, shows early signs of stress, as the growth of employment slowed down and unemployment increases.
These trends have thrown cold water onto a glowing stock market and triggered new fears about a potential recession, with the S&P 500 stumbling 10% of its record heights in February, although it had recovered a significant soil by Friday afternoon.
Now that investors and managers are more concerned about the effects of the tariffs for consumer expenses And annoyance about an administration that you had great hopes a few months ago, even the strongest companies are striking careful tones, as the weaker get louder.
Take Walmart, the DE-FACTO manager of the retail industry, who has transformed an unsafe economy into fuel for growth last year when it is upset by consumers with higher incomes. When Walmart announced the winning of the fourth quarter for the fourth quarter last month, the share fell after warning that profit growth would be slower in the coming year than expected. It was a rare warning sign of a company that tends to thrive in a weaker economy, and an indication that it expects consumers to fall back on the coming year of discretionary goods with higher margins in favor of essential such as milk and paper towels.
“We don't want to get out of our skis here. There is a lot of time to play,” John David Raidy, head of finance of Walmart, told the analysts when he discussed the prospects of the company. “It is advisable to have a view that is measured something.”
Charly Triballeau | AFP | Getty pictures
Ed Bastian, Managing Director of Delta air lines – The most profitable US airlines, which has appointed great expenses in recent years, has made a similar tone after reducing his profit and sales forecast for the first quarter. In an interview on Monday about CNBC's “Closing Bell” Bastian said that the trust of consumers had weakened and that both leisure and business customers have withdrawn to bookings, which led to it reducing his instructions.
“Consumers in the discretionary company don't like uncertainty,” said Bastian. “And although we believe that this will be a period of time that we go through, we also have to understand and get into calmer waters.”
Of course, it was not only fewer people who booked the airline that predicted the airline in the first quarter. Questions about air safety improve the problem after two big flight accidents, including Delta's own crash landing in Toronto, in which nobody died.
Beyond Delta, Rival United said that 21 aircraft will retire prematurely, a step that should reduce the costs.
“We also saw weakness at the demand market,” said Kirby at the JPMorgan Airline Industry Conference on Tuesday. “It started with the government. The government is 2% of our business. The government next to each other, all other consultants and contracts associated with it are probably a further 2% to 3%.
The airline, like some of these dynamic “bleeding” into the domestic leisure market, also added Kirby. He said that the company is already checking where there are flights and a large drop in traffic from Canada to the USA and in markets that were popular with government employees.
American Airlines lowered his winning forecast from the first quarter and said that the bookings were injured in addition to the demand pressure after a fatal collision of a army assistant with one of his regional jets in Washington, DC.
The company also felt that the withdrawal on state trips and the associated trips as for contractors withdraw.
“We know that there is also a certain follow -up effects in relation to leisure trips that are also connected to it,” said CEO Robert Isom.
However, the managers of airlines were optimistic about long -term demand in 2025.
Other strong companies, such as Dicks sporting goodsPresent Elf Beauty And Abercrombie & FitchWeak forecasts have also spent in the past few weeks, although they provide information that they felt positive in the second half of the year.
“I think it's just an uncertain world at the moment,” said Ed Stack, chairman of Dick's Sporting Goods, to CNBC when he was asked about the company's guidance. “What will happen from the tariff's point of view? You know when tariffs are set up and the prices rise as they could, what will happen to the consumer?”
Last year, companies such as United, Walmart and Abercrombie made it to surpass this S&P 500Even as a buyer, reduced the discretion expenses, this change in the comment is a great shift. It is a warning sign that buyers could start cracking and that even an excellent execution after four years of historical inflation does not match tariff-induced price increases.
In the meantime, the companies that have already referred to unusual consumer dynamics last year are still concerned.
“Our customers continue to report that their financial situation has deteriorated last year because they were negatively influenced by the continuing inflation. Many of our customers report that they only have enough money for fundamental basics, some of them found that they even had to sacrifice the necessities,” said the CEO General. The deterioration in consumer prospects has tightened the company's internal challenges.
“When we entered in 2025,” continued Vasos. “We do not expect an improvement in the macro environment, especially for our core customers.”
Elsewhere in the retail industry, American eagle On Tuesday, the cold weather warned a slower than expected start in the first quarter, but not only said the temperatures. The clothing dealer expressly called out “less robust demand” and said that he undertook measures to reduce expenses and manage the inventory, since it is important for what will come.
“[Consumers] I'm afraid of the unknown. Not just tariffs, not just inflation, we see that the government cuts people. You don't know how it will affect you. They see that programs are cut, they don't know how it will affect them, “said CEO Jay Schottenstein.” And if people don't know what they don't know, they become very conservative … it all makes a little nervous. “
Comments are closed.